Starknet has unveiled Bitcoin staking in an official manner, together with a fresh BTC yield strategy, which is already a big step into the BTCFi ecosystem still growing. Through this project, holders of Bitcoin are empowered to stake their BTC on Starknet in such a way that they fully maintain their custody, at the same time they can generate a passive income that is really attractive and help the L2 network to be more secure.
Source: The Block
In the words of Starknet, the presented solution is the very first trustless method through which Bitcoin may be staked on Layer 2 chains. The employed approach is based on various wrapped versions of Bitcoin-one of which are WBTC, tBTC, Liquid Bitcoin, and SolvBTC. These BTC derivatives have just become eligible to join the network consensus via the on-chain governance voted in August, 2022, meaning they can now coexist with STRK.
Besides, zk-STARK, a cryptography method known for its post-quantum security features, is used to secure these assets.
Eli Ben-Sasson, CEO and co-founder of StarkWare, highlighted the vision behind the launch:
“We’re bringing value to Bitcoin holders with no loss in trust. For me, it’s two dreams converging — ZK-tech merging with Satoshi’s vision.”
Ben-Sasson also noted that Bitcoin, the first cryptocurrency, now plays a direct role in securing another decentralized ecosystem, calling it “a move Satoshi would be proud of.”
With the goal of promoting faster adoption, the Starknet Foundation is pledging 100 million STRK tokens (approximately $12 million) in order to incentivize borrowing and lending activities that are associated with Bitcoin. The project aims to make Starknet the platform with the lowest fees for the users who want to use BTC as collateral, thus providing more liquidity and yield opportunities.
Moreover, Re7 Capital, an investment firm in digital assets, will introduce a new yield product denominated in BTC on Starknet in October. The method is to trade derivatives, generate DeFi yield, and stake BTC to make the returns come directly in Bitcoin. The product is designed to satisfy institutional requirements and, therefore, will be also available in the form of tokenized securities for retail investors.
These changes are the deep end of the first wave of the BTCFi roadmap of the long-term project of Starknet aimed at identifying the network as the execution layer for Bitcoin. By introducing staking, borrowing, and yield generation, Bitcoing has gotten so far as to become the asset that stores value and, at the same time, gets actively involved in defi.
